FCC prepares for ‘complicated spectrum auction’

Congress granted Federal Communications Commission Chairman Julius Genachowski’s wish for the power to hold an airwaves auction that will pay broadcasters to abandon some of their frequencies, but turning that wish into reality is going to be a challenge. The agency is trying to figure out how to design and conduct the complex auctions, which for the first time will pay people to give up valuable airwaves.

Congress provided for the auctions in the payroll tax package. The goal: to free up a big chunk of spectrum for commercial wireless carriers. “There are essentially two auctions that have to run in parallel,” said Peter Cramton, a University of Maryland economics professor who led the team that designed an airwaves auction for the United Kingdom. “There is the reverse auction that will make spectrum available from TV broadcasters that will determine the supply, and the forward auction that is the more standard variety, that will allow the wireless companies to buy.” In a nod to the difficulty of the task, Chairman Genachowski recently announced a new incentive auction task force, headed by Ruth Milkman, a former chief of the Wireless Telecommunications Bureau. Genachowski also hired a who’s who of auction experts to aid the commission in its efforts.

(April 4)